- FTSE 100 falls 59 points, FTSE 250 rises 0.4%, AIM 100 jumps 4.4%
- UK borrowing costs remain largely unchanged post-Budget
- Quarterly results from StanChart, Next impress investors
- Drugmakers GSK and Eli Lilly earnings disappoint
5.00pm: FTSE 100 closes lower
London's blue chip index closed out the day 59 points lower at 8,159.
4.12pm: Markets mixed as traders chew over Budget
As we head into the final half hour of trading, the FTSE 100 is down 54 points or almost 0.7% at 8,165, while the more UK-focused FTSE 250 is up 0.5% at 20,717.
The FTSE AIM 100 index is up 4.5% at 3,626.05, earsing the losses from the previous week but still down sharply in the year to date.
UK bonds have calmed down a bit after an initial sell-off, which sent gilt yields surging. The 10yr gilt jumped from 4.21% to 4.44% (near 12-month highs) between 2pm and 3pm, but has now eased back to 4.34%, which is still higher than where they started the day.
Top risers on the FTSE 350 included bookmaker Entain, up 9% due to Budget relief about new gambling taxes.
Aston Martin Lagonda rose 5.9% and Standard Chartered climbed 4.1% climbed as their quarterly results impressed, with Next PLC (LSE:NXT) up 1.3% on its third increase to guidance in the past four months.
A promised boost to the building trade gave a boost to the likes of Grafton Group and Ibstock, while pub groups like JD Wetherspoon and <&B jumped before most of the share price froth was later blown away.
Budgets since 1970, by magnitude of tax rises:
1) Lamont, ERM (1.4% of GDP)
2) Reeves 2024 (1.25%)
2) Sunak, Covid (1.1%)
3) Healey, oil shock (1.0%)
4=) Brown, NHS
Healey, oil shock 2 (0.9%)
6=) Howe, recession
Clarke, ERM 2
Just Reeves' NIC rise (0.8%)
(Adapted from @TheIFS)
— Robert Colvile (@rcolvile) October 30, 2024
3.50pm: Immediate real Budget impact on housing market
Following the stamp duty hike from 3% to 5% on second homes, several mortgage brokers report landlord clients have either pulled out of deals entirely or are looking to renegotiate prices.
Jack Tutton of SJ Mortgages says two landlord clients have pulled out of buying additional properties.
Kelsey Phillips, head of specialist lending at Arose Finance, says: “Within minutes of the Chancellor announcing the additional surcharge, our investor clients were on the phone to estate agents renegotiating purchase prices lower.
"The immediacy of this tax hike will be painful for clients in the middle of completions and may cause some chains to collapse. Going forward, increasing the levy to 5% will undoubtedly restrict investment demand and make buy-to-let significantly less attractive to non-professional investors."
3.43pm: More deep Budget analysis
A deep dive into the Budget from the IFS, where director Paul Johnson says his broad brush strokes view is that it was the Budget we had been led to expect: "big tax rises, more cash for public services, more borrowing and more investment", with two big judgements or gambles that the Chancellor seems to be making.
- He says the government's "first gamble" is that a big cash injection for public services over the next two years will be enough to turn UK economic performance around.
- "If she’s wrong about that, and spending pressures don’t dissipate after two years, then to avoid cutting unprotected areas she may well need to come back with another round of tax rises in a couple of years’ time – unless she gets lucky on growth."
- The second gamble is that the extra borrowing will be worthwhile, with the previous government set to borrow an average of £59 billion per year over the next four years, with Reeves' plan to borrow an average of £85 billion with the hope that the benefits more than offset the costs from higher debt servicing, higher inflation and higher interest rates.
- "A lot hinges on how well the government spends the money," says Johnson.
- "The additional investment is extremely front-loaded, which doesn’t fill me with confidence on how efficiently it will be spent - if indeed it is spent in that timescale."
- The OBR points to a short-term "sugar rush" from the debt-financed spending splurge, which turns into a modestly negative impact by the end of the parliament, and eventually boosts output in a sustainable way from 2032.
- On the increase in employer National Insurance contributions, Johnson says the need for Reeves to increase taxes substantially meant this was always one of the obvious choices.
- The OBR suggests three-quarters of the impact of employer NICs will be felt by employees, which partly explain why the OBR has downgraded its projections for real household income growth over the next few years.
- "The employer NICs rise will further increase the incentive for employers to switch to contracting with the self-employed."
- He agreed that the fiscal inheritance from the previous government was "truly dire" and Hunt's spending plans "were never likely to survive contact with a spending review" meaning that "tax rises were always a near-inevitability".
- On the new fiscal framework, he says it is "sensible" that day-to-day spending is to be met from within revenues, with the rule gradually moving from a five-year to a three-year rolling target, though like others notes that the Chancellor hasn’t left herself much headroom for manoeuvre.
- The switch to PSNFL hasn’t given Reeves as much additional fiscal space as she might have expected, owing to volatility in the PSNFL forecast, he says, which "might itself raise some questions about its suitability as a fiscal target".
- But in basic terms, more borrowing still means more debt, more spending on debt interest, with the OBR expecting interest rates to fall less quickly than they would otherwise have done.
3.30pm: AIM high
The jump in AIM stocks reflects investors in the junior market celebrating a reprieve from a potentially large inheritance tax blow.
Ahead of the Budget, scare stories or misdirection had led to fears that an inheritance tax exemption for AIM shares would be removed, which sparked a rash of selling.
However, the Chancellor kept the relief, albeit cut in in half to 20%, though this was still much better than expected.
For one AIM company, green fertiliser producer ATOME PLC, it was far from the worst outcome.
"AIM will still offer a unique way for investors to support homegrown, early-stage UK companies," says Olivier Mussat, ATOME's chief executive.
He says the recent speculation on tax changes definitely impacted share prices "but now the market has certainty, I expect we will soon see a recovery".
3.20pm: Budget to result in slow rate of Bank of England cuts
In one line, Chancellor Reeves has announced substantial extra upfront expenditure, and a looming jump in businesses’ labour costs, which will compel the Bank of England to cut rates slowly, says Rob Wood, chief UK economist at Pantheon Macroeconomics.
It was an "expansionary Budget which increases spending much more than taxes", he summed up.
The OBR’s economic forecasts were little changed from March, so nearly all of the increase in the borrowing forecast is due to policy decisions, Wood says, as well as the overspend this year relative to the previous government’s implausible plans.
As a proportion of GDP, the forecast for borrowing in 2024/25 has increased to 4.5%, from 3.1% in the March Budget, with the 2025/26 forecast increasing to 3.6%, from 2.7%.
Gilt yields dropped in the hours leading into the Budget, but as has been noted, increased by about 5-to-10 basis points (bps) since the OBR’s economic and fiscal outlook was published, as the scale of the extra spending in the near term has emerged.
"Governor Bailey has hinted recently that he wants to reduce interest rates quickly, but the BoE’s forecasts until now have been based on the March Budget plans and we think today's fiscal easing has exceeded the Committee’s expectations.
"In addition, the bigger-than-expected 7% increase in the National Living Wage, alongside the increase in employers’ NICs, will boost labour costs and prolong the return of services CPI inflation to target-consistent rates."
Accordingly, Wood reckons Reeves’ Budget leaves him more confident in his prior call that the BoE will reduce interest rates by a 25 bps every quarter until it hits 4.00% at the end of 2025, slightly more slowly than markets expect.
He still expects the BoE's monetary policy committee to cut rates by 25bps in November, but to stand pat at December's meeting.
2.59pm: Gilts wobble
Gilts started to sell off again in the past hour, sending yields rising.
The 10yr Gilt is up at 4.399% now, and the 2yr bond has jumped to 4.38% after the Budget.
But yields appear to have spiked for now and started to come back down again.
The spark for this was the OBR’s economic and fiscal outlook being published, showing the scale of the extra spending in the near term.
Jason Borbora Sheen, bond portfolio manager at Ninety One PLC (LSE:N91), said: "we expect the gilt market focus to return to cyclical growth and inflation dynamics".
With Bank of England rates still in restrictive territory, he continues to expect UK interest rates to be cut, with the monetary policy committee moving toward a sequential pace of cuts.
"The overall increase in the net cash requirement for the current fiscal year of £22.3 billion is broadly in line with consensus expectations.
"We don’t yet know the split between UK Treasury Bill and gilt issuance, nor the cumulative increase in borrowing required over the remainder of the forecast horizon. We will be closely watching the breakdown released by the DMO."
Gilt yields jumping 11 basis points then back down 5bps to 4.38% in short order, was "volatility selling which is not good to see", says market analyst Neil Wilson at Finalto.
He says it "reflects the major concern we had before the Budget at last – markets were pretty sanguine at first but now reflecting a premium due to extra borrowing and slack growth outlook. Spending a lot for not very much and bond vigilantes are sniffing it out."
2.48pm: Economists' thoughts on the Budget
Sanjay Raja, chief UK economist at Deutsche Bank, has provided a quick take on the Budget, calling it "a marked shift in fiscal policy" as public services spending will rise by £50 billion by the end of the decade and investment spending by another £20 billion.
"But the cost of more spending will be equally big," he says, with the shift in fiscal rules resulting in a "historic increase in taxation", with the Chancellor's policies calculated to raise £40 billion by the end of the decade.
"The Chancellor's fiscal framework is simple: going forward, borrowing will be reorganised to drive investment and put debt-to-GDP on a more sustainable footing," says Raja.
"The focus now is on repairing public services and boosting investment with the aim of boosting growth. At its peak, the OBR expects announced policies to lift GDP by 0.6% in 2025/26."
In the end, he says "markets will have to grapple with higher borrowing", with borrowing set to be nearly £30 billion per year more by the end of the decade, much driven by investment spending.
While markets remained broadly sanguine during the Budget, he says it "signals a lot more gilt issuance to come, relative to previous expectations".
"Headroom remains a problem", Raja adds, with the Chancellor having £10 billion under the current rule and just under £16 billion under the new debt rule.
"With public spending pressures only likely to increase from here, the Chancellor will be walking a tight rope between even more tax hikes and/or cuts to spending to ensure she does not fall foul of her newly designed fiscal charter."
2.32pm: Budget spending
Here is the link to the full budget statement from the Treasury.
(And the OBR has also just published its review of the previous government's March budget, which former chancellor Jeremy Hunt was trying to block.)
But some headline spending figures from today's Budget, much of which will be outsourced to contractors:
- The Chancellor confirmed an additional £22.6 billion for day-to-day spending to support the NHS, aiming to reduce waiting times, plus investing around £1.5 billion capital funding for new surgical hubs, diagnostic scanners and new beds across the NHS estate and £100 million for 200 GP surgery upgrades across England.
- For education, an additional £4 billion was announced for the sector, including £2.3 billion into the core schools’ budget, plus £1.4 billion for the school rebuilding programme, including an increase of £550 million this year.
- There was £2.9 billion of additional total funding to the Ministry of Defence, growing the defence budget by 2.3% for the year.
- An additional £1.9 billion total departmental spending to the Ministry of Justice, plus £2.3 billion of investment in prison expansion over 2024‑25 and 2025‑26.
Paul Johnson, director at the Institute for Fiscal Studies says in a tweet that the timings of additional spending are "astounding", with £64 billion more next year than planned, rising only by another £10 billion over the following four years.
"Two risks: (1) can this scale of increase be spent well that fast? (2) is it really credible then to slow growth to such a crawl?"
2.22pm: What companies are moving on Budget news?
Looking at the shares that have moved the most today, top of the FTSE 350 risers is Ceres Power Holdings PLC (LSE:CWR, OTC:CPWHF), up 8.1%, presumably on the back of the Burget including 11 new green hydrogen projects.
Bookmaker Entain is up just over 7%. This seems to be linked to the gaming duty being frozen until March 2026, while a consultation will begin next year on proposals to bring online and other remote gambling into a single tax, aiming to "simplify, future-proof and close loopholes in the system". Entain and others had fallen in recent weeks on news of a possible new gambling tax.
Building sector names are also massing near the top of the leaderboard, including Ibstock PLC (LSE:IBST), Grafton Group PLC (ISE:GFTU), Travis Perkins (LSE:TPK) PLC, along with builders Crest Nicholson on the mid-cap list, Persimmon PLC (LSE:PSN) and Barratt Redrow PLC among the blue chips.
Pub companies Mitchells & Butlers PLC (LSE:MAB) and JD Wetherspoon PLC (LSE:JDW) are up over 3%. The government is cutting alcohol duty on draught products from February next year.
"Permanently lower" business rates multipliers were also announced for retail, hospitality and leisure (RHL) properties from 2026-27. The Budget also provides £1.9 billion of support to small businesses and the high street in 2025-26 by freezing the small business multiplier and providing 40% relief on bills for RHL properties, up to a £110,000 cash cap.
2.03pm: CGT and stamp duty changes 'could have been worse'
"The increase in rates of capital gains and carry taxation to levels substantially below the highest rates of income tax rates should be seen by the funds management industry, investors and entrepreneurs alike as good news," says Jason Clatworthy, managing director at Alvarez & Marsal Tax.
"Provided no more material changes are proposed in the short term, this should help in providing certainty for the sector and hopefully mitigate the flight of talent to leave the UK."
Sarah Coles, head of personal finance at Hargreaves Lansdown, says: “The change is a blow for investors. This could have been worse, with suggestions of a doubling of the rate, but it’s scant consolation for anyone hit with a bigger tax bill.”
Craig Ritchie, partner at GSB Wealth, says: "Overall, the budget has not been as hard hitting on personal finances as perhaps expected, largely thanks to the increase in employers' National Insurance.
"Increases to CGT are not as high as expected and level the playing field once more between shares/funds and property investing."
The abolition of the non-domicile scheme and move to a residency based scheme, says Ritchie, "presents huge opportunities for UK expats, who intend to remain outside of the UK to pass on wealth free of UK IHT. For those transitioning back to the UK, there is an opportunity to take advantage of the generous four-year foreign income and gains (FIG) regime."
On the increase in additional stamp duty, he says this will "further weaken the landlord/buy-to-let investment market and support investment into other traditional investment vehicles".
1.52pm: Budget over, responses begin
Rachel Reeves finishes speaking and sits down, the FTSE has erased most of its losses in the past few minutes too.
The FTSE 250, seen as more representative of the UK economy, has leapt higher, charging 355 points or 1.7% northwards to 20,978.
And the FTSE AIM 100 index has rocketed 150 point or 4.3% higher.
Now it is the turn of former PM Rishi Sunak, with shadow chancellor Jeremy Hunt sitting beside him, to respond.
And it is time for my inbox to be deluged by responses and opinions.
1.48pm: Wall Street opens lower
In the Budget, the Chancellor announces funding for "11 new green hydrogen projects" alongside founding the new GB Energy, headquartered in Aberdeen.
In markets, Wall Street's main indices have stumbled lower in early treading.
The Dow Jones is down 0.1%, the S&P 500 and the Nasdaq have dropped 0.2%. The small cap Russell 2000 is down 0.3%.
In the Dow there are just 6 stocks in the green, led by Visa and Amazon, while in the S&P it's roughly half and half.
Super Micro Computer is down 27% after its auditor resigned.
Eli Lilly is down 11% after it turned in results showing lower sales and earnings than expected, leading to the outlook being slashed, with sales of its Zepbound weightloss drug falling well short of analysts’ expectations.
Risers are led by Garmin, up 12% on strong earnings and a raised outlook, while Alphabet's two main share classes have gained around 7%.
1.32pm: Gilts market remains chilled so far
UK government bonds are little moved as Rachel Reeves delivers the Budget and confirms the plans for the new fiscal rules.
She says the government’s new investment rule will see debt defined as "public sector net financial liabilities", PSNFL for short and known as "persnuffle" by some more whimsical economists.
The yield on the 10yr Gilt is standing at 4.212%, down 10 basis points today.
1.17pm: Inheritance tax, capital gains tax, AIM market, business asset disposals
Some of the other Budget updates:
- Chancellor Reeves announces she will scrap inheritance tax relief on shares held in London’s AIM market but will introduce a new 20% rate on AIM-traded shares.
- On capital gains tax, she says the lower rate will rise from 10% to 18%, and the higher rate from 20% to 24%, which she points out will still be the lowest rate for any European G7 country. CGT on residential property will remain unchanged.
- Business asset disposal relief is not going to be increased significantly, as some recent newspaper reports indicated, but will stay at 10% before rising to 14% in April 2025 and 18% from 2026. Meanwhile, private equity managers will have to pay 32% tax on their carried interest gains from April 2025.
- The freeze on inheritance tax thresholds will be extended to 2030, which Reeves says will mean the first £325,000 of any estate can be inherited tax free, rising to £500,000 if the estate includes a residence passed to direct descendants, with a loophole created by the previous government closed, by bringing inherited pensions into inheritance tax from April 2027.
- A renewal of the tobacco duty escalator at RPI plus 2% with a flat rate duty on all vaping liquid products introduce from October 2026 alongside a one off increase in tobacco duty.
- Targeting private jet usage with an increase in the rate of air passenger duty by 50%, “equivalent to £450 per passenger for a private jet to, say, California”, aiming a jibe at the jetsetting former PM.
1.10pm: National insurance changes
Rachel Reeves announces that the rate of employer National Insurance contributions has been increased from 13.8% to 15% from April.
The threshold at which it is paid has been cut from £9,100 per year to £5,000.
"These changes won’t have an immediate impact on employees but over time the higher cost burden on employers could feed through into lower wage increases," says Helen Morrissey, head of retirement analysis at Hargreaves Lansdown.
"It may make employers less likely to increase pension contributions beyond auto-enrolment minimums and offer fewer benefits."
12.55pm: Budget tax haul and OBR forecasts
The first big Budget headline from Reeves is that the Budget raises taxes by £40 billion.
This follows criticism of the previous government, including the £22 billion "black hole".
Reeves says the Office for Budget Responsibility (OBR) was not given all the necessary spending plans by the Tory government, meaning any comparison with the March Budget under Jeremy Hunt would be false.
Our October 2024 real GDP growth forecast. Full forecast published after the Chancellor’s #AutumnBudget speech pic.twitter.com/9fzGAYjVDK
— Office for Budget Responsibility (@OBR_UK) October 30, 2024
Reeves also shared the new OBR forecasts based on her Budget plans.
These show show 2024 GDP growth of 1.1%, (up from the OBR's March forecast of 0.8%), growing to 2.0% in 2025.
OBR forecasts show 2029 GDP growth of 1.6%, based on the Budget boosting long-term growth.
OBR sees a UK deficit of £26.2 billion for 2025/26 and Reeves says the government will meet current budget balance rule in 2029-30, then balancing the budget in the third year of the forecast period.
"We will meet budget stability rule two years early," she says.
OBR growth forecast up this year and next but below 2% a year after that. Still pretty disappointing stuff.
— Paul Johnson (@PJTheEconomist) October 30, 2024
12.36pm: Budget up and running
The Chancellor is up and speaking. See our Budget Live blog for rolling update focused on Reeves' speech.
We will have a mix here.
On that note, US stock futures are down.
Dow futures are down 0.4%, S&P 500 futures are down 0.2%, with Nasdaq futures just below flat.
US GDP has come in at a solid 2.8% for the third quarter, down slightly from the 3.0% pace in the second quarter and below the 3.0% expected.
12.33pm: Telling off
Ahead of her big speech, Rachel Reeves, like her predecessors, has been given a ticking off by the deputy speaker ahead of the Budget for leaking reports about its contents in the previous weeks.
The announcements should be made in the Commons first, she says.
Pre-Budget leaking and briefings has been going on for decades, to be fair.
12.28pm: European stocks sink, FTSE at lowest since early August
In the past hour, the FTSE 100 has fallen to its lowest in over two months, down around 50 point to below 8,170.
This 0.6% decline is the lowest since 9 August, though stocks in Europe are lower.
Germany's DAX is down over 1.1%, France's CAC 40 down 1.6%, with Spain and Italy's stock benchmarks down over 1% too.
12.20pm: A currency analyst's view on the Budget
With the pound under pressure today, Rabobank currency analyst Jane Foley says: "If Reeves can successfully sell her budget as one that will boost productivity and growth in the UK, the outlook for GBP will improve over time.
"However, investors will need proof that her plans are likely to bear fruit. The initial reaction of the gilts market today will be key."
In coming weeks, confidence and PMI measures will provide early reactions to the Budget before official data suggest if the UK economic outlook has improved.
Rabobank's base view is that EUR/GBP will "continue its slow grind lower" in the medium-term, as the dovish ECB exposes the EUR to Germany’s structural issues.
"This, however, could change if the gilt market wobbles after Reeve’s announcements."
Either way, against the US dollar, the pound could continue to struggle in the face of USD strength, Foley adds.
She says that while Labour has vowed not to increase taxes for workers, many people are concerned that higher taxes on businesses will have a negative impact, while some consumers are worried about expected changes in capital gains and inheritance tax treatment.
On the plus side, the Bank of England is expected to cut interest rates by another quarter point at the November 7 meeting, "providing a softener to businesses and consumers worried about the impact of higher taxation and should help support growth", says Foley.
Extra spending on public services including the National Health could be part of a holistic approach to reduce waiting lists, improve the health of workers and reduce labour shortages, which if it increases the supply of workers will be a positive for business, she adds.
"However, labour supply will continue to be threatened by the impact of an ageing population and by political pressure to cut net migration levels.
"In many respects, these pressures emphasise the need for productivity to rise and illustrates the need for more investment."
11.55am: FTSE sinking lower
The FTSE is falling further as we are just over half an hour from the Budget announcement from Rachel Reeves.
GBP is down 0.4% against both the euro and US dollar, at 0.8347 and 1.2964.
11.32am: Budget calm before the storm
Today's Budget is expected "a burden on business," says Russ Mould, investment director at AJ Bell, noting the pre-released news about higher rate of employer National Insurance, a rise in the minimum wage and changes to employment rights that will all drive up costs.
But he says Rachel Reeves "might pitch the Budget as putting more pounds in people’s pockets".
Bond markets have in recent days braced for higher levels of government borrowing, with gilt prices falling in recent weeks, which has lifted yields on the 10yr gilt to 4.32% yesterday, its highest level since June.
A fall to 4.218% has occurred in the past couple of hours though.
"Investors will be hoping this isn’t simply the calm before the storm," says Mould.
"The last thing the market wants is for Reeves to pull a Halloween-themed rabbit out of the hat that scares investors and causes another Liz Truss-era horror show."
He noted that investors don’t seem to be on tenterhooks, with the classic UK stocks heavily tied into the economy such as banks, housebuilders and retailers little moved in early trading on Wednesday.
The FTSE 250, which has a greater proportion of stocks generating their income from the UK than the FTSE 100, will be the index that best reflects stock market opinion on the Budget. It is currently just above flat.
Chancellor @RachelReevesMP has left Number 11 to deliver her first Budget. pic.twitter.com/SN8MYK0rzm
— HM Treasury (@hmtreasury) October 30, 2024
11.05am: A City Cavalier's view on a 'Roundheaded' Budget
The FTSE 100 is close to its lowest level in almost two months, "investors are wary, Labour seems scary", says market analyst Neil Wilson at Finalto.
"But will it be all that bad?" he wonders.
Wilson says he wants to tell the "Roundheaded, puritanical" Labour leadership to "cheer up, it may never happen…so gloomy and serious and earnest without any charm or humour... For all the talk of investing for growth, growth, growth, there is not much verve or excitement about doing it".
For those in the markets and worried about stocks or bonds or the pound, he says, "it all boils down to whether the Budget says ‘sell UK’ or ‘buy UK’. This is not necessarily going to be straightforward."
Two years ago, the "KamiKwasi" mini Budget saw Liz Truss and Kwasi Kwarteng crash the pound to its lowest since 1985, with gilts selling off and emergency measures required by the Bank of England, and gilt yields are "the thing to watch" today, says Wilson.
The UK 10yr gilt is now yielding a bit more than the US 10yr Treasury by a couple of basis points, while the spread with the German 10yr Bund is back to around 200bps, levels that Wilson says have only touched a couple of times in recent years, though this is due to "other more Germanic reasons".
"But if spreads widen it would reflect a doomster risk premium for the UK that we would assume is down to the Budget.
"Remember with the mini-Budget it was not so much the absolute level of the yield but the size and the speed of the move. This was pushing against an open door and the market is not the same as before."
10.29am: 'Most consequential Budget for a decade'
Today's speech from Rachel Reeves "may be the most consequential Budget for a decade", says the respected National Institute of Economic and Social Research research institute.
"It’s the new government’s first major opportunity to define its economic vision for the UK and put some meat on the bones of some of its key manifesto pledges," notes Ben Caswell, NIESR senior economist.
"We'd like to see the Chancellor raise the personal tax-free allowance in order to reduce the tax burden on those in work who currently earn the least and to offset the effect of potential reductions in labour demand arising from the increase in employer NICs.''
Associate economist Monica George Michail, says the UK is "at a critical juncture after years of sluggish growth and deteriorating public infrastructure".
She said the NIESR hopes "the new fiscal rules will strike a balance between creating fiscal space and ensuring long-term financial stability".
10.14am: European stocks sinking lower
Stock markets in Europe have sunk lower following the deluge of mostly positive economic news this morning, which has seen the euro strengthen against USD and GBP.
Germany's DAX and Spain's IBEX are both down more than 0.5%, while France's CAC 40 has crumpled over 1% lower, while Italy's FTSE MIB has dropped 0.8%.
The pan-continental Euro Stoxx 600 index is down almost 0.8%, with the biggest fallers being Italy's Davide Campari-Milano, down 15%; French clean energy group Nexans, down 10%; French investment giant Capgemini, down 8%; Bank of Ireland Group, down 4.4%; and GSK PLC (LSE:GSK, NYSE:GSK), down 4%.
Amid the continental selling, London's FTSE has found its losses trimmed slightly, now down 18 points at 8,201.
10.04am: Eurozone GDP beats forecast
The macro focus this morning is on Europe, ahead of the UK Budget later, with eurozone GDP figures just out showing growth of 0.4% for the third quarter compared to the previous.
This was up on the 0.2% quarterly growth in the second, which was expected to be continued.
Compared to last year, euro area GDP was up 0.9%, improving from the 0.6% growth in the second quarter and beating the 0.8% consensus estimate.
The euro is up 0.3% versus the pound at £0.8338 and 0.2% versus the US dollar at $1.0838.
9.40am: Germany avoids recession
A recession in Germany has been avoided, according to the flash estimate that shows the economy there grew 0.2% quarter-on-quarter in the third quarter, from a fall of 0.1% in the initial reading of the second quarter.
The German statistical agency said the unexpected growth was driven by both private and public consumption.
The positive surprise for the third quarter was also dampened by a downward revision of the second quarter to a decline of 0.3%.
Year on year, the economy shrank by 0.2% in the third quarter.
"Has all the drama just been exaggerated?" wondered economists at ING.
Although a technical recession was avoided, they point out that the German economy "remains barely larger than it was at the start of the pandemic".
9.14am: UK and European shares in the red
A little over an hour into Wednesday's trading session, the FTSE 100 is down 35 points or 0.4% at 8,185, while the FTSE 250 is just below flat at 20,616.
Doing the damage for the blue-chip index are falls for several of its 20 largest names, including a 3.4% decline for GSK on the back of its quarterly results. BP, Diageo and BAE Systems are also down close to 2%.
It's not just a UK budget thing, it seems, with all the major European indices sliding lower.
The DAX is down 0.4% in Frankfurt, while the CAC 40 and FTSE MIB are both down around 9% in Paris and Milan, while Spain's IBEX is in the middle, down 0.55%.
The Euro Stoxx 600 is sitting 0.6% lower, with the big faller being Italy's Campari, down 14% after the spirits group missed third-quarter earnings expectations.
Setting the scene, market analyst Kathleen Brooks at XTB says: "It’s a packed schedule for financial markets on Wednesday. We have euro area GDP; a raft of corporate results and the centre piece is today’s UK budget.
She notes the bond market rout that saw European and US bond yields jump on Tuesday is currently in reverse, and the UK Gilt yield is down some 6 basis points in early trading.
"The UK’s 10-year Gilt is outperforming its European counterparts with just a few hours to go before Rachel Reeves’s first Budget," says Brooks.
"Is this a sign that the bond market will welcome the fiscal shake up that is set to be announced later today? We could traders see ‘sell the rumour and the buy the fact’ in the UK Gilt market, once the uncertainty of the Budget is out of the way."
Today from 12.30pm the Chancellor of the Exchequer @RachelReevesMP will deliver the Budget Statement.
???? Watch live with #BSL interpretation on @UKParliament X ↓#Budget2024
— UK House of Commons (@HouseofCommons) October 30, 2024
8.57am: StanChart and Next results examined
The Standard Chartered trading update showed Q3 profit 21% above consensus forecasts, says analyst Joseph Dickerson at broker Jefferies.
Within revenue, net interest income was 2% ahead and non-interest income was 7% better than the City average prediction, with record wealth revenue up 32% and Financial Markets up 32% the key drivers.
The shares have hit their highest since the summer of 2015, but analyst Gary Greenwood at Shore Capital reckons they are still undervalued.
As for Next, Clive Black at Shore Capital says highlted the particularly strong sales in UK online (+7.9%) and overseas (+20.4%), while UK store-based sales saw a return to growth at +2.9%.
"Having highlighted the cold summer weather as a reason for slower sales in Q2, Next now humbly gives credit, citing an earlier descent into the winter chill as boosting demand for Autumn/Winter ranges, particularly versus the clement September and October enjoyed last year."
Black suggests Next only nudging up guidance might "leave space for another beat" at the next update.
"Given the meteorological drivers behind the outperformance, Next do expect a slowdown in growth for the rest of the year, bumping up the full price sales guidance for the all-important fourth quarter by just 1% to +3.5% (as it expects some of the autumnal spend to have been pulled-forward)."
8.52am: GDP improving in Europe
Some European economic data - France’s economy expanded by 0.4% in the third quarter compared to the second, a little stronger than the consensus forecast of 0.2% and better than in the first half of the year, while real GDP in Spain rose by 0.8% after climbing by 0.8% in the second quarter, also above the consensus forecast of 0.6%.
Full eurozone GDP data is out later and expected to remain at 0.2% on a Q-on-Q basis, up 0.8% up on a year ago.
Headline inflation in Spain rose to 1.8% in October from 1.5% in September (with another notable headline also from Spain that more than 50 people died as eastern Spain was hit by one of the worst storms in decades overnight).
"Third quarter GDP data reported so far suggest that the aggregate euro-zone growth rate will be a little higher than we had forecast in Q3, but the big picture is that, the Olympics and Spain aside, growth in the euro-zone is weak and probably slowing," said Andrew Kenningham, chief Europe economist at Capital Economics.
8.42am: Small-cap spotlight
Diversified Energy Company PLC (LSE:DEC, NYSE:DEC) completed its acquisition of operated natural gas assets in East Texas, paying an adjusted price of $49 million – for that, it receives production that’s estimated to earn $19 million this year, and, reserves valued at $89 million.
Bradda Head Lithium Ltd (AIM:BHL, OTC:BHLIF, TSX-V:BHLI) has begun a new metallurgy study, supported by AI technology, and its expected to move the firm closer to a potential production decision in 2025.
HeLIX Exploration PLC (AIM:HEX) has started drilling the Darwin-1 well at its Rudyard project, in Montana. The drill operation is targeting ‘stacked’ reservoir structures within the Souris River and Dry Creek intervals, both of which are known for their helium potential. Drilling will run for a couple of weeks.
Ananda Developments Plc (AQSE:ANA) reported significant progress in the first half of the year, as preparations advanced for two fully funded phase II clinical trials, to evaluate its MRX1 cannabidiol (CBD) formulation to treat chemotherapy-induced nerve pain and endometriosis.
Thor Energy PLC (AIM:THR, OTCQB:THORF, ASX:THR) firmed up its proposed acquisition of 80.2% Australia-based natural (white) hydrogen and helium explorer Go Exploration into a binding agreement.
Hemogenyx Pharmaceuticals PLC (LSE:HEMO, OTC:HOPHF) announced the timeline for its upcoming phase I clinical trial of HEMO-CAR-T, a new treatment for adult patients with relapsed or treatment-resistant acute myeloid leukaemia, a severe form of blood cancer.
8.36am: Minimum wage hike
Yesterday evening the government announced a 6.7% rise in the "national living wage", resulting in a pay rise for over three million workers from next April, with a rise in the 18-20 national minimum wage to boot.
The Treasury accepted the recommendation from the Low Pay Commission on the rates.
The living wage boost will be worth £1,400 a year for an eligible full-time worker.
Ahead of today's budget, the chancellor has also lifted the minimum wage for 18 to 20-year-olds from £8.60 to £10.00 an hour, resulting in pay being boosted by £2,500 next year.
The Treasury said it marks "the first step towards aligning the national minimum wage and national living wage to create a single adult wage rate, which would take place over time".
Chancellor Rachel Reeves said: "This government promised a genuine living wage for working people. This pay boost for millions of workers is a significant step towards delivering on that promise."
The term national living wage was first introduced in the UK in 2015 by then-chancellor George Osborne as new wage rate aimed at workers aged 25 and over, later reduced to 21, and set above the national minimum wage to address living costs more directly.
8.23am: StanChart and Aston Martin impress
StanChart is topping the blue-chip leaderboard, up 3.5% after upping its guidance for this year and the next two.
While other mining and commodities names are in the red, Glencore PLC (LSE:GLEN) shares are up 2% on the back of its production update, where full-year guidance was maintained.
CEO Gary Nagle said he expects full-year marketing profits in the $3.0-$3.5 billion range, which would be around the top end of the group's long-term guidance.
With the gold spot price hitting new heights this morning, above $2,788 per ounce, Endeavour Mining is up 1.1% on the FTSE 100, with Centamin PLC (LSE:CEY, TSX:CEE, OTC:CELTF) up 2.5% on the 250.
Next PLC (LSE:NXT), after beating expectations and upping its guidance, is up 1.6%.
Topping the mid-cap risers is Aston Martin Lagonda Global (LSE:AML), up 5.9% as it reported some success with the re-release of its iconic Vanquish sports car, but still struggling with operating losses and broader volume declines.
8.11am: FTSE opens sharply lower
The FTSE 100 has crumpled in early trading, falling 46 points or 0.6% to just below 8,1734.
Anglo American PLC (LSE:AAL) is the biggest faller, down 3.7% after headlines emerged from former suitor BHP, which says it has "moved on" to focus on other growth opportunities.
GSK is down 3.4% after its mixed third-quarter report.
Other commodities companies are among the fallers, including BP PLC (LSE:BP.) and Rio Tinto PLC, with all but two of the Footsie's top 20 largest companies in the red.
8am: StanChart hikes outlook
Standard Chartered PLC (LSE:STAN) upped its income guidance for the full-year and the next two years as it, like larger rival HSBC announced last week, plans to focus more on its wealth management arm and restructure its retail banking businesses.
A strong performance was reported for the third quarter, with profit before tax up 41% to $1.8 billion, driven by a record quarter in wealth and strong growth in its capital markets unit.
"We are doubling investment in our consistently fast-growing and high-returning wealth management business, and we will continue to reshape our mass retail business to focus on developing our pipeline of future affluent and international banking clients," said chief executive Bill Winters...read more
7.52am: Takeover news
Two bits of offer news this morning, the first being an update from CAB Payments Holdings PLC (LSE:CABP) after it revealed two weeks ago that StoneX Group Inc has proposed a possible cash offer.
"Discussions with StoneX are continuing and StoneX and its advisers are undertaking due diligence," CAB says today.
Also, another from AIM-listed payment solutions provider Eckoh PLC (AIM:ECK, OTC:EKTPF), which has been mulling a takeover by a private equity suitor since August.
Today it said an all-cash deal had been agreed at the previously mooted price of 54p per share, valuing it at £169.3 million on a fully diluted basis.
This is only an 11% premium to the closing price before the deal was announced, but Eckoh's board has been casting around for a deal since last year and this seems the best it could find.
7.39am: GSK keeps guidance unchanged
GSK PLC (LSE:GSK, NYSE:GSK) has reported a small fall in revenues and a big drop in profits for the past quarter but kept its guidance for the full year unchanged.
The medicines maker's total operating profit fell 86% and earnings per share plunged 100% driven by the £1.8 billion charge in relation to the Zantac settlement agreed earlier this month.
Sales came in at £8 billion, down 2% on last year, though if the strengthening of the pound and other currency swings were ignored, they were 2% higher.
Core earnings grew 5%, driven by a strong performance by specialty medicines, offsetting a 15% fall in vaccines sales
GSK declared a third-quarter dividend of 15p and saying its continue to expect 60p for the full-year.
7.22am: Next raises outlook
Next PLC (LSE:NXT) raised its full-year outlook for the third time since the summer as sales in the third quarter came in 7.6% higher than this time last year, above previous guidance for 5.0% growth.
The high street clothing retailer Next said it now expects full price sales growth to +3.5%, up from 2.5% before.
Full-year profit guidance has been lifted to just over £1 billion, up from £995 million previously.
7.15am: FTSE 100 expected to fall pre-Budget
The FTSE 100 is expected to fall on Wednesday, gripped by nerves ahead of the Labour government's first Budget at lunchtime today.
London's blue-chip index has been called 30 points lower on futures markets, having lost 66 points yesterday to drop back to just under 8,220.
Overnight, US stocks had a mixed session, with the S&P 500 inching 0.2% higher despite over two-thirds of its constituents falling on the day, as big tech stocks drove gains, and saw the Nasdaq rise 0.8% to a record high.
After the close, Google parent Alphabet impressed with a quarterly sales and earnings beat thanks to growth of its cloud computing arm, sending its shares almost 6% higher in post-market trading.
Earnings from Microsoft and Meta Platforms are due after today's Wall Street close.
In London, we have results from Next PLC (LSE:NXT), GSK PLC (LSE:GSK, NYSE:GSK), Standard Chartered PLC (LSE:STAN), Aston Martin and more.